The refuge was opened in 1978 by then NSW Premier Neville Wran's wife Jill Wran, after it received a special grant from the Premier.

Its founder, Pamela Ashton, said she felt compelled to lobby for a refuge after finding a mum and five children on the Tenterfield Rd outside Casino on a cold winter's night.

The young mother had been dumped at a bus shelter by her drunk husband after complaining he was drinking too much.

"It was a great struggle to set it up in those days because it was a conservative community," Mrs Ashton recalled.

"I feel incredibly worried for women and children," she said of the planned closure.

"These are the people who are the neediest."

Women's services worker, Liz, said the closure would mean some women might choose to stay in domestic violence because the alternative could be impossible to manage.

Refuge resident "Lyn" has spent a month there with her two teenage children after living in the family car for four months.

She was worried the family would have to return to the car if the refuge closes, after failing to secure any subsidised accommodation to help bridge them into the open rental market.

Mr Guise dubbed it "classic cost shifting" which would increase the burden on emergency services and cost more in the long-run.

He said reform in the sector was needed, but the "one size fits all" approach was "naive and short-sighted".

A spokesman from the Department of Family and Community Services said the department was in discussion with the current managers of the refuge and the new provider of homelessness services under the Going Home Staying Home reforms.